On Our Radar

On Our Radar

Dunkin' Brands tempers growth forecast over election jitters

Dunkin' Brands Group Inc on Thursday tempered its forecast for openings of flagship U.S. Dunkin' Donuts shops, saying the contentious U.S. election was undermining franchisee confidence about the economy and regulations, from federal to local levels.

Continue Reading Below

Shares in Dunkin' Brands, which are fueled by expectations that Dunkin' Donuts will expand aggressively in the United States, were down 4 percent at $48.95 in midday trading on Thursday.

The acrimonious campaign between Republican presidential nominee Donald Trump and his Democratic rival Hillary Clinton has created uncertainty and some franchisees are waiting until the political landscape is clear before they move forward with investments, Chief Executive Nigel Travis told Reuters.

The group now expects net new U.S. Dunkin' Donuts openings to be at the low end of a previously-provided range of 430 to 460 stores this year.

"Franchisees are uncertain which direction everything is going in terms of government," he said. "Everyone is sick to death of the election ... Once we know the direction we're going in, they'll be able to deal with it" and growth will resume, he added.

U.S. restaurants are battling intense competition from upstart chains and meal-kit sellers, in addition to getting battered by falling grocery prices, which are encouraging more people to eat at home.

Continue Reading Below

ADVERTISEMENT

Sales of iced coffee and breakfast sandwiches helped overcome that weakness at U.S. Dunkin' Donuts outlets, where sales at established restaurants rose a better-than-expected 2 percent in the third quarter ended Sept. 24, according to the results, released on Thursday.

That was not the case at Baskin-Robbins, which reported a surprise 0.9 percent drop in same-store sales. As a result, the company now expects Baskin-Robbins U.S. same-store sales growth to be "slightly positive" for the year, compared with its previous forecast for growth of 1 percent to 3 percent.

Net income attributable to Dunkin' Brands rose to $52.7 million, or 57 cents per share, in the quarter from $46.2 million, or 48 cents per share, a year earlier.

Excluding items, the company earned 60 cents per share.

Dunkin' said total sales fell 1.3 percent to $207.1 million, due to the sale of company-operated stores to franchisees.

Analysts had expected total sales of $214.4 million and earnings per share of 59 cents, according to Thomson Reuters I/B/E/S.

(Reporting by Lisa Baertlein in Los Angeles and Sruthi Ramakrishnan in Bengaluru; Editing by Martina D'Couto and Alan Crosby)